But that doesn't mean you need to keep 53% of the entire account balance at all times in safe reserves. Even the worst drawdown recovered in about 5 years. The point of the reserves is to avoid being forced to liquidate due to catastrophic events when the investment is underwater. catastrophic events aren't restricted to a 5 year smoothed spread.

Since retirement investing should be planned to potentially support you for 30 - 40 years (depending on how early you plan to retire), that means that one would only need to hold 53% of up to 5 years in reserves (or 6.6% - 8.8% of the account value for an account that is planned to last 30 - 40 years), not 53% of the total account value. No, you seem to be focusing on the reserves supporting the retirement distribution after the point of financial retirement has been achieved. While worthy, that's less important during accumulation than the avoidance of forced liquidation while in drawdown.

When (not if) such events occur to the 'statistically unlucky' during the market drawdown, any reserve level less than the full drawdown forces liquidation of the working equity at that deeply underwater level, permanently removing that capital, and all of its future growth, from the account.

Since a 'retirement plan' builds to a singular point in time... the point where bulletproof, safe, passive income supersedes lifestyle expenses all the way through dirt nap time... there is no capital available to lose until after that level (financial retirement) has been reached. And only the funds accumulated *AFTER* that point in time can be afforded to be permanently lost.

And for those of us who actually allocate our money to different accounts for different purposes, and hold the reserves separately from the retirement investments, 100% of the retirement investments can be put toward retirement, with no additional reserves needed.Holding sufficient reserves separately from the investment accounts is exactly what I am saying is necessary, when investments are exposed to downside volatility.

If the allocation has no historical drawdowns, then you'd have the same functional risk profile as the IUL. It would still have to sufficiently outperform the IUL enough to overcome the tax & positive arbitrage distribution features... and that's not an insignificant hurdle to clear.

What kind of allocation has that net performance? Heck, it doesn't even have to be a naked B&H... it could be *any* mechanically self-adjusting system (could include mechanical rebalancing, hedging, etc.) I am *absolutely* open to (and looking for) such a passive, long term, buy & forget it mix.

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